ISLAMABAD, 13 June 2004 — Pakistan’s new national budget for fiscal 2005 provides a number of tax cuts to boost the business and personal incomes, but some small new taxes have been levied where the economy was yielding high profits. This is included in the budget presented by Finance Minister Shaukat Aziz in the National Assembly last evening.
“The overall purpose of the budget and the taxation proposals it contains is to maintain the growth momentum, expand production, create new jobs, increase personal incomes, and reduce poverty. Our future will depend on maintaining and strengthening this momentum, for which God Almighty has provided us with a rare opportunity, although we have missed several such chances in the past.”
He said, “our objective also is to reduce the cost of doing business in Pakistan, so that the country is fully braced up to face the challenges of globalization and a new World Trade Order which will be launched in January 2005.” In order to assist foreign private investment “our effort is to send a signal to investors that Pakistan is a competitive, investor-friendly and a highly beneficial country to invest in and profit from it.”
As Prime Minister Mir Zafarullah Khan Jamali, his full Cabinet and the entire Treasury and opposition leaders and benches listened to the budget speech, Aziz appealed to all parties to rise above the “party divide” for adoption of “a bipartisan approach on all economic policies and maintain and assure their continuity so that foreign and domestic investors are encouraged to invest in Pakistan, help its economy expand, and profit from their business.”
“It is extremely essential that a solid national consensus is evolved and adopted over continuation of economic reforms and business policies,” he said. The minister said the budgetary deficit in the just-ending fiscal 2004 has come down from 4.0 to 3.9 percent. The growth target for 2005 that will start July 01, is 6.6 percent, and the budgetary deficit will be 4.0 percent of GDP. A total expenditure of Rs. 805 billion was estimated for 2004, but the actual amount has risen to Rs. 868 billion, because Pakistan paid its $1.7 billion expensive foreign debt to Asian Development Bank and Japan.
He proposed an expenditure of Rs. 902 billion for fiscal 2005, out of which government will spend Rs. 202 billion on national development projects in the field of irrigation and water, electricity, telecom, railways, highways and roads, health, education, and other programs of poverty reduction and to create one million new jobs.
Defense spending has been raised from Rs. 181 billion in 2004 to Rs. 193 billion in 2005 because of “the special situation at Pakistani borders,” by which he generally meant the present anti-terrorist campaign on Pakistan-Afghanistan borders. The government’s tax collection in 2004 was Rs. 761 billion, but it will be Rs. 721 billion in 2005.
The difference between the tax collection and spending in 2005 will be met through Rs. 45 billion government’s bank borrowing and estimated inflow of Rs. 156 billion in the form of external resources, including foreign assistance and credits.
